Tetraphase (TTPH) - Get Report had a nice run since my first article but has pulled back with the rest of the biotech sector. Tetraphase's experimental antibiotic eravacycline is approaching an important 12 months, with data expected from a phase III trial in complicated inter-abdominal infections (cIAI) as well as data from the lead-in of its phase III program in complicated urinary tract infections (cUTI). As a next generation tetracycline, Tetraphase's eravacycline has a significant commercial opportunity. For instance, Pfizer's (PFE) - Get Report tigecycline (the most recently approved next generation tetracycline) is already generating $450 million in sales. The lead-in for the cUTI trial is expected to happen in the middle of 2014 and will go a long way toward deciding the market potential of eravacycline.

When I last wrote aboutCempra (CEMP) and solithromycin, I noted the importance of the drug's adverse event profile and how the positive thorough QT (heart rhythm) study went a long way in demonstrating clean safety. Eravacycline is in a similar situation with the the lead-in stage of the phase III cUTI trial, in which patients are administered the antibiotic intravenously first and then transitioned to an oral formulation.

The ability to have an IV to oral "step down" option expands the commercial opportunity but there is risk with eravacycline. The oral bioavailability (the amount of the drug that moves from GI tract into the body) is only 30% at most. For other antibiotics like Cubist Pharmaceuticals' (CBST) Sivextro, the oral bioavailability is over 90%. Most oral antibiotics have oral bioavailability over 50% if not over 80%. The 30% oral bioavailability of Tetraphase's eravacycline is not a game ender but it remains on the low side.

This matters for two main reasons. First, you need to get enough drug distributed from the GI tract into the blood stream and tissues for the antibiotic to work. If the bulk of the antibiotic is not absorbed then efficacy will be harmed. Of course, you can simply dose up the oral formulation to increase exposure but that increases your cost of goods and makes the drug less tolerable. The cost of goods does not seem to be the key issue for Tetraphase but with such a low bioavailability you worry about tolerability.

If only 30% of the antibiotic is being absorbed, then the other 70% is in your GI tract potentially affecting your natural bacteria. Disrupting this bacterial flora can at a minimum cause GI discomfort but at worst could lead to c. difficile infections. While I am not saying that is the case with eravacycline, I will argue that the lead-in is an important test of the tolerability of the oral formulation and the most significant de-risking event for the oral formulation.

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The IV to oral cUTI trial has three arms: a levofloxacin control arm and two eravacycline arms where both start with an IV and one steps down to a 200 mg oral dose (twice a day) and the other to a 250 mg oral dose (twice a day). The two eravacycline arms allows the company to compare the blood levels and kinetics of the oral doses and choose the one that best matches the IV exposure and distribution. I would also focus on the tolerability profile of the two eravacycline dose schedules.

What would poor tolerability look like? Given the short analysis period, it seems unlikely that we would see any issues with c. difficile infections. The more likely differentiator (in order of importance) would be the rates of nausea, vomiting and patient drop outs. Patients leaving the study early are a signal that eravacycline is not being tolerated well. Drop outs also hurt the efficacy analysis of the study because they count as treatment failures.

In my opinion, the most likely scenario we'll see from the lead-in phase of the cUTI study is a numerically higher rate of nausea and perhaps vomiting in the eravacycline arms but which don't reach statistical significance against the comparator. At that point, it will come down to how large of a difference and the effect it would have on a potential label. It seems unlikely that there will be enough of a difference to cause Tetraphase to stop development of the oral formulation. Assuming the eravacycline exposure is high enough, I suspect Tetraphase pushes forward with the lower dose and then we wait for the completed phase III cUTI data for a fuller picture of tolerability.

Tetraphase's stock price has pulled back significantly, so the risk/reward is looking increasingly more attractive, as long as you're aware that buying ahead of the lead-in cUTI data assumes drug tolerability risk.

Sobek has no position in Tetraphase but is long Cempra.

David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvnia State Univeristy in 2003 and a BA in international relations from The College of William and Mary in 1997.